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Japan Inflation November 2023

Japan: Inflation dips to lowest since July 2022 in November

Inflation came in at 2.8% in November, which was down from October’s 3.3%. November’s figure marked the lowest inflation rate since July 2022, and reflected a sharper fall in food plus electricity and gas prices. Meanwhile, services prices rose at the sharpest pace since October 1993, suggesting that the Bank of Japan’s push to boost wages via its ultra-low interest rates is working.

In addition, the trend pointed down mildly, with annual average inflation coming in at 3.4% in November (October: 3.5%). Meanwhile, core inflation—which excludes volatile fresh food prices—fell to 2.5% in November, from October’s 2.9%, and was in line with market expectations.

Finally, consumer prices fell 0.22% from the previous month in November, swinging from October’s 0.85% increase. November’s result marked the weakest reading since February.

Our panelists expect inflation to continue to decline ahead, falling below the Bank of Japan’s 2.0% target in Q4 2024 on a higher base effect, lower food prices, and a stronger yen. Commodity prices are a key factor to watch.

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